22 May Visions: IT exec says CIOs must be ready to help companies ramp up trade
Madison, Wis. – Chief technologists who heretofore have not had to worry much about helping their companies ramp up foreign trade may soon be asked to add another dimension to their business contributions – accommodating a larger presence in the global market.
With Wisconsin increasing its export activity at a double-digit annual pace – up 15.1 percent to $17.2 billion in 2006 – and more businesses interesting in cracking foreign markets, more technologists will be relied upon to help firms expand geographic markets.
Murali Iyer, director of IT strategy and global outsourcing for Wipfli LLP and Spider Logic, believes technologists and their employers will need to get up to speed on building relationships with foreign trade partners.
“Definitely, companies need to be looking at expanding their horizons, and being prepared,” he said. “The marketplace is now global. You sell, you buy, and you procure services, everything, all over the world. There are pockets of innovation in Wisconsin, and people on the coasts would be amazed that someone in Wisconsin is doing global business, but we have an opportunity to really take it to a new level.”
What does that entail for an IT department or chief technologist? If it’s a matter of selling or procuring internationally, Iyer said computer systems have to be prepared to deal with back-office transactions with international customers, and technologists need to be able to take care of currency conversions, value-added taxes, and other stipulations covered in trade agreements.
If the company is going to have members of its workforce overseas, they will need access to their corporate portal exchange network, e-mail, and other systems. In addition, there may be systems integration work to be done with different accounting or enterprise resource planning systems.
“Actually, it’s one of the main factors the top of the company needs to be looking into because it’s about people, process, products, and technology,” Iyer said. “These are the four key points that one has to be looking at in terms of integration.”
Shoring things up
Iyer, who works with international clients, was one of three panelist at the monthly Wisconsin Innovation Network luncheon who addressed the subject of international trade. Much has been made of American companies “offshoring” jobs to foreign counties, and the most recent example was Fiserv’s announcement that it has hired 1,000 employees in India since creating a business unit there in late 2005, and that it plans to hire 4,000 more by the end of 2009.
Fiserv, a Brookfield-based company that sells software and data processing products to banks and credit unions, cited lower labor costs – on a 2- or 3-to-1 basis – and a competitive need to control expenses.
Iyer advocates “right-shoring,” which can be a combination of offshoring, onshoring, and near-shoring components as part of an integrated “sourcing” strategy.
Here, too, technologists can play an indispensable role. In this context, when an organization implements an IT solution, Iyer said it either looks for people within the company to build the required systems, or the actual software construction may have to be done by consultants or contractors, which could be onshore, offshore, or near-shore.
“It’s basically, if you look at the software development lifecycle, which parts of the lifecycle do I need to fill in with external resources?” he noted. “Could it be done onshore? Must it all be done onshore? Could it be done partially offshore? So that’s why I call it the right shore, rather than just the onshore or offshore.
“It could all be onshore, it could all be offshore, but typically it’s a blend of the two.”
Fiserv already has 230 offices worldwide, but most of its 23,000 employees are in the United States. Iyer said observers should dig a little deeper than the cost-cutting part because it also could be an opportunity to expand Fiserv’s market. Having a greater presence in India for its banking services, a field that Iyer said is hungry for technical innovation worldwide, is one way to accomplish that.
“The Bank of Americas, the Wachcovias – all of these have already done it with their budgets,” he said. “They have either outsourced to companies in India, or they partner with companies in India, or open their own offices in India, but I’m not surprised that a company like Fiserv is looking there to not only reduce costs, but I’m hoping that their vision includes expansion of their own markets into the rest of the world.”
Shareholder value might be another factor. Shareholders demand better performance from their companies, which compels them to find ways to deliver more value. They either innovate their processes to squeeze every last efficiency out of the operation, or they look for sources that will provide them with an advantage, Iyer said.
Job losses or gains?
Iyer and fellow panelist Scott Papador, chief technology officer with Global Health Direct, said the trade issue should not be viewed from the standpoint of job loss. “Jobs won’t get lost,” Papador stated. “It will help bring products to market faster and at lower costs, enabling you to build your company faster, which creates jobs here.”
In 20 years, Iyer has witnessed the pain and the positive changes increased trade has brought. He said one point that gets lost in the concern about job losses is that by helping India and China build their economies, work is created here.
He has walked the streets of Bangalore and seen equipment from Caterpillar and Case New Holland, but that’s not all.
“You go to India and you look at a call center at an IT company. Most of the machines, most of the equipment that is there, including the cubicle separators, they are either made in the U.S. or bought from U.S. companies,” he said. “So, we’re selling a lot more to those parts of the world than we did before.”
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• Michael Rosen: A Midwest passage to India, Part II
• IT workforce development: A little workforce planning goes a long way
• IT workforce development: Losing the numbers game
• Free trade vs. fair trade
• Bill Bryant: Offshore outsourcing affects American workers